South Africa is facing 'the most important' election since Nelson Mandela's 1994 win

South Africans are heading to the polls on Wednesday in what Barclays analysts have dubbed “the most important elections since the 1994 democratic transition” — back when Nelson Mandela was elected in the country’s first elections post-Apartheid.

What makes these 2016 local government elections so significant is that they come at time when the ruling party, the African National Congress, is starting to see its support slip.

“We view these elections as the most important since [1994] because they could herald a sea change in South African politics with much greater contestability than ever before,” wrote Barclays’ Peter Worthington and Miyelani Maluleke in a note to clients last week.

“This raises particular challenges for South Africa’s young democracy, but we believe that political democratic pluralism is key for political and economic progress over the long run.”

The ANC has been the major party in South Africa since 1994 when it pushed against the white minority rule. But, over the last few years, support for the party has been trickling down, and it’s now facing competition from other parties, including the main opposition: the Democratic Alliance (DA).

Additionally, if ANC does poorly in these elections, the BBC notes that there could be added pressure on scandal-prone president Jacob Zuma to step down.

BarclaysDA’s share of vote in national elections and local elections has grown over the years.

Already in
the 2014 national election, the ANC’s vote in the several big cities fell to around 50%, Steven Friedman, the Director of the Centre for the Study of Democracy at Rhodes University and the University of Johannesburg, noted in a post for Brookings Institute.

The New York Times’ Norimitsu Onishi explains that these three are key given that the DA has traditionally been a party whose support came from whites, South Africans of mixed race, and middle class blacks. So, he writes, if they win in any one of the aforementioned cities, “where blacks are clearly in the majority, [it] would be a significant breakthrough: The party could present itself to all black voters as a viable alternative.”

And this is particularly notable given that the ANC is “the party of Nelson Mandela.”

Still, Friedman writes that the ANC is still quite popular elsewhere, which he argues reflects an economic post-1994 development of “insiders and the outsiders” — where although the former are now black and white, the latter are still predominantly black.

“As in many other countries, South African local elections are less about their ostensible purpose — electing governments in 278 municipalities — than a test of support for national parties,” Friedman argued in his Brookings post. “They may signal whether the next national election, in 2019, will be another foregone conclusion for the governing [ANC] or the most competitive in the country’s democratic history.”

In the background of all this, South Africa has been marred by economic problems over the last few years, which the BBC noted would be “one of the main issues as people vote.”

The country’s economy sharply contracted by an annualized 1.2% in the first quarter of 2016 — the most recent figure available — compared with the previous three months when it expanded by 0.4%, according to the statistics office.

Moreover, South Africa has been struggling with extremely high unemployment, which economists have attributed to poor education system and structural problems left over from the Apartheid era. The ratehit a 12-year high of 26.7% in the first quarter of 2016.

And as a subset of that, there’s also a huge youth unemployment problem. The International Labour Organisation (ILO) estimates that the country saw a youth unemployment rate of 52.9% in 2014 — which is particularly noteworthy given that 46.95% — nearly half — of the population is under the age of 24.

Notably, there has been some rising discontent in the lead up to the elections with several ANC local councilors being shot and killed. In light of that, Worthington and Maluleke argued that the biggest risk would come if parties or a large segment of the voters reject the election’s result.
“We think the main danger lies in the immediate wake of the elections, once the [Independent Electoral Commission] announces the results. There is a real risk that parties and voters who dislike the results may be tempted to dismiss them as ‘rigged,'” the Barclays duo wrote in their note.

“How parties and the electorate react to these results will be a key test of the political maturity of South Africa’s young democracy,” they continued. “A willingness on the part of all parties and the electorate to work patiently with the IEC and the courts to resolve any hiccoughs, and to accept the final election results would be a very encouraging signal for the country, just as its converse would not.”

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.